APPENDIX 17
Memorandum from QinetiQ
RESEARCH COUNCIL SUPPORT FOR KNOWLEDGE TRANSFER
INTRODUCTION
QinetiQ is Europe's largest commercial provider
of research and technology professional services, with 11,500
employees world wide and 9,000 in the UK. Having evolved from
the research laboratories of the Ministry of Defence into the
private sector, knowledge transfer lies at the core of QinetiQ's
activities as it increasingly converts its world leading military
technologies into commercial applications in security, health
care, transport, environmental protection and other fields.
QinetiQ's evidence is drawn from more than 15
years experience of the journey from being government laboratories
detached from the industrial main stream to becoming a successful,
growing and international company listed on the London Stock Exchange.
QinetiQ positions itself in the supply chain
between the blue sky researchers in universities and the product
manufacturers in industry. We have deep engagement with the UK
university sector which has recently been taken forward through
a series of formal partnerships. At the same time we earn substantial
and growing revenues from business relationships with more than
1,000 commercial customers. We have learned that technology exploitation
cannot be achieved by either market knowledge or technology invention
alone. It is the ability to span the great divide between the
two that unlocks the hidden potential.
QinetiQ has direct links with the Research Councils,
particularly the EPSRC and PPARC. Dr Alison Hodge, QinetiQ's University
Partnerships Director who compiled this evidence, is a member
of EPSRC's User Panel; about 30 QinetiQ staff are members of its
Peer Review College. QinetiQ also supports PPARC's Industrial
Programme Support Scheme, by providing its Chairman and supporting
the knowledge transfer process. The company is engaged with a
number of Research Council-led initiatives to link business with
academia. QinetiQ has also recently established, with the EPSRC,
a Chair at Imperial College to study and take forward the process
of Technology Transfer in the physical sciences.
QinetiQ welcomes the Research Councils' increased
emphasis on support for Knowledge Transfer. We recognise the challenges
of achieving this objective alongside the very different goals
in teaching and basic research. Our evidence identifies where
focus could be provided by the RCs to heighten the impact of their
actions.
We welcome the Committee's decision to look
into this subject, and have grouped our detailed comments under
the four headings identified in the call for evidence.
EXECUTIVE SUMMARY
(i) The Research Councils' (RCs) support
for knowledge transfer is relatively new, and increasing. QinetiQ
is supporting these initiatives and welcomes them.
(ii) The RCs should be made fully accountable
for generating and adding value to integrated portfolios of research
that either advance the frontiers of purer science and knowledge
or enhance national competitiveness through business.
(iii) The RCs need to understand the cost
and complexity of issues of knowledge transfer. They should bring
in experienced practitioners from outside and train their staff
and university researchers to embrace new knowledge transfer activities.
(iv) Businesses can be engaged earlier in
the process as active participants. Large companies and those
involved themselves in research are well equipped to participate
but SMEs will need targeted engagement to draw in.
(v) The role of bodies other than the Universities
(such as industry, venture capitalists, trade bodies) in knowledge
transfer is being acknowledged. RC funds should therefore be open
to these other bodies supporting technology transfer. Competitive
awards would be assessed both for research quality and potential
economic benefit.
(vi) RCs, particularly in the physical sciences,
should be prepared to devote a larger percentage of their funds
to the innovation phase. Funding criteria need to be adjusted
to incentivise applied science.
(vii) RCs have an important role to play
in supporting the Government's efforts to turn its procurement
budget into an engine for innovation.
(viii) Full involvement of key people is
essential for knowledge transfer. RCs must facilitate more movement
of not only younger students and recent graduates, but also experienced
Council staff, researchers and industrialists.
(ix) RCs must enable all stakeholders easier
access to their organisation, including those less familiar with
their research programmes. Their structures and processes are
hard to understand, and their communications are predominantly
to inform rather than to listen or gather information.
(x) QinetiQ advocates more robust financial
measures including the introduction of Full Economic Costs. With
more experience, this will enable the RCs to value and consider
the implications of their decisions, enabling better focus of
national resources and hence better value for money in the longer
term.
QinetiQ's evidence
Promotion of collaborative working between researchers
and partners in industry, including in the creative industries
and in SMEs.
1. The RCs are doing much more than previously
to promote knowledge transfer between university researchers and
industry. QinetiQ endorses this policy, seeing collaboration as
a key enabler for more researchers to use their projects to support
the national economy.
2. Given the costs and risks of technology
exploitation there are relatively few companies for whom it is
a sensible decision to devote resources to understanding the output
from Research Council funding. QinetiQ, atypically, depends on
research and development for its own core business and is large
enough to allocate technical staff to forging links with universities
and RCs. Some technology-driven majors such as Rolls Royce and
the Pharma companies also have similar resources deployed but
for the vast majority of industry the initiative is likely to
have to come in the other direction.
3. Many industrial partners are "attached"
to proposals without sufficient commitment, involvement or expectation.
The RCs could therefore be misled into believing that their connection
with exploitation of technology is greater than in practice it
is. Only if industrial partners have "skin in the game"
by participating significantly in the work or by providing substantial
funding can their serious attention be confirmed.
4. This economic realism is further supported
by the introduction of full economic costs. With more experience,
this will enable the RCs to value and consider the implications
of their decisions, enabling better focus of national resources
and hence better value for money in the short and longer term.
5. While the RCs are encouraging researchers
to collaborate with business, a number of factors impede smoother
interaction. Supporting knowledge transfer is a new activity so,
not surprisingly, there is a lack of knowledge on all sides, approaches
and mechanisms remain immature. If the intended benefits are to
be achieved, swift focus on the inhibitors is essential. We suggest
that the following aspects are considered when considering Council
support for Knowledge Transfer:
The knowledge, skills and experience of RC staff
6. There is a national shortage of staff
skilled in technology transfer and those most able are more likely
to seek employment in the most remunerative sectors. Thus the
Venture Capital (VC) industry, and particularly its bio-sciences
subsector, tends to be a magnet for the best staff.
7. The university sector has drawn in a
large number of staff in recent years and many are on a very steep
learning curve. Unlike the VC industry and commercial companies,
the university sector is financed largely by grant and therefore
lacks the rigorous financial discipline of money that has been
raised from investors. The danger is that the real costs associated
with apparent successes might be disguised and therefore capital
misallocated.
8. Skills can be improved by Human Resource
(HR) policies such as secondments to and from industry. Of the
schemes promoting knowledge transfer, the one most appreciated
by QinetiQ is ICASE awards: PhDs allocated to the company part-funded
by the Research Council. This scheme is simple to understand and
operate, has considerable flexibility and is respected by academics,
students and the company. More ICASE awards would be welcomed
in preference to proliferating further schemes.
Narrow and segmented activities within and across
the RCs
9. The main task of RCs is research funding
which by its nature tends to be narrowly focused on topics of
particular excellence. Technology Transfer opportunities tend
to exist at one or two levels of aggregation above that. While
there are attempts to focus funding into substantial centres of
specialist expertise, greater concentration would offer critical
mass, depth with breadth, larger and sustainable teams, and reduce
the task of business in trying to find its way around. This is
especially important for EPSRC which operates no laboratories
of its own.
10. The RCs (along with other funding bodies,
notably Hefce) fund significant expenditure for equipment and
facilities. While investment in rejuvenating facilities is welcome,
there is duplication in some areas and inefficient and subcritical
utilisation elsewhere. The RCs should reconsider how and where
they allocate resources, including more centralised and managed
facilities—perhaps operated by Agencies or industrial companies,
but with regard for the implications of travel. Some closures
must be accepted in consequence.
11. Modern equipment often needs sophisticated
associated infrastructure, dedicated specialist operators and
technical support teams to maintain optimum effectiveness and
outcomes. Integrated operations of this type are rarely available
in the universities, so RCs could be achieving a poor return on
their investment. Most research teams prefer to "own"
their own facilities rather than share or buy capability from
others. An additional and perverse outcome of the current approach
is that students are not trained to access equipment and facilities
elsewhere; such skills will be required in later employment.
The motivations, drivers and constraints that
influence university staff when responding to RC calls for proposals
in Knowledge Transfer
12. In QinetiQ's experience researchers
the world over have a common culture of "grant farming".
The key characteristic of this is that a grant requires no return
which is helpful when the objective is to continue to further
knowledge. Business on the other hand has an investment culture.
All expenditure must be balanced by the expected return. These
cultures sit against each other awkwardly in the Knowledge Transfer
arena. Since there is no intention to change research culture,
it might be more effective to place the leadership for Knowledge
Transfer assignments with business collaborators.
13. Industry led investigations and challenges
can be as demanding to complete as academic studies. Applying
research requires very different skills from pushing the frontiers
of science. The RCs need to recognise and ensure that people with
different experiences, aptitudes and inclinations are engaged,
even though such skills are in short supply and high demand. Few
individuals can excel in or have time for teaching, research and
knowledge transfer; each should be recognised and cultivated as
a skill in itself.
Technology push versus market pull
14. Technology is very rarely the only crucial
ingredient in a business venture. Value most often comes from
bridging the gap between market need and new technology. In different
areas of science this gap varies in difficulty to cross. Pharma
companies are skilled at understanding biological and medical
advances and seeing the application to medicines. Researchers
in those areas are therefore "closer to market". In
physics based sciences it is rare for a single invention to unlock
a market need and therefore the Knowledge Transfer task is greater.
15. It follows that if the Knowledge Transfer
quotient in physics-based sciences is to equal that in the life
sciences the proportion of resources devoted to the task is likely
to be greater.
16. The Government's procurement budget
of over £120 billion per annum should be a powerful engine
for innovation. Despite Ministers' intentions, it has not yet
become so. There are many reasons for this, but the RCs, as government
funders, are well placed to stimulate and support embodiment of
newer research contributions in major government procurements,
involving suppliers where appropriate and working with the regions
and other government departments.
The high cost of getting new knowledge into the
market place
17. In promoting Knowledge Transfer, the
RCs should separate more clearly their funding streams for research
which is truly original, leading edge and remote from immediate
application, from research that is closer to exploitation. They
should ensure that applied projects have clear potential exploitation
routes with proactive user involvement from the outset. Some funded
activities may arouse researchers curiosity but the work is neither
leading edge nor likely to be applicable.
18. The cost of transferring research outcomes
into the market is very high. Intellectual property may be overvalued
by universities, a "new" piece of knowledge may not
add significant value for industry: in some instances it may threaten
existing business, in others a new market must be created.
19. The recent emphasis on the universities'
intellectual property has not always been helpful. In particular,
it has tended to encourage overambitious valuations and too many
immature companies. The award of capital to new ventures must
be accompanied by rigorous commercial disciplines if it is not
to be misallocated.
Stakeholder engagement and communication
20. The RCs have an important role and duty
in taking on difficult issues of communication and engagement
in areas where individual research providers are potentially exposed.
Such area include animal experimentation, nanotechnology and nuclear
matters.
21. Communication is a two-way process but
much of the Research Council communication is confined to formal
reporting and briefing to interested parties about their activities,
through, for example, leaflets, bulletins such as Spotlight, occasional
more formal or informal presentations, the web and on line electronic
tools.
22. By contrast, we have seen relatively
little consultation with users, and recent appointments of relationship
managers are welcomed. However, calls for proposals are only sent
to universities and the EPSRC "peer review college"
is dominated by academics. PPARC's PIPSS panel is well balanced,
including industrialists in an even mix, and the EPSRC User Panel
is also an excellent forum; but how widely known are they?
23. The RCs ask university researchers to
engage companies within set timescales that are not necessarily
in line with industry demands. This inevitably leads to random
conjunctions, rather than longer term strategic opportunities
being developed for the UK economy.
24. Students funded by the RCs are key stakeholders.
Students subsequently moving into employment provide a strong
mechanism for Knowledge Transfer that could be exploited better,
if tracked by the RCs.
Results and performance management
25. The UK scores well in international
comparisons when measured by bibliometrics. There is little doubt
this is due in no small measure to the funding mechanisms linked
to measurement. These have, however, been focused on the research
and teaching agendas. When addressing the Knowledge Transfer agenda
they have taken a simple view of what constitutes the results
of their work. Statistics of grants awarded and PhDs completed
have been sufficient; added value and wider benefits were rarely
considered. The RCs are now considering what "outputs"
they generate from their significant investments but this is still
very immature. In practice, metrics for assessing the value of
knowledge transfer are difficult to establish; those considered,
such as numbers of industry collaborations, patents and start-up
companies, do not reflect accurately the value of interactions
to users and may distort adversely the behaviour of some research
teams.
26. QinetiQ would favour a much more market
based approach requiring a clear account of the monies invested
in Knowledge Transfer and the returns earned.
27. There is also a question about metrics
used in assessing the quality of research. Citation indices are
often used but these are unlikely to be favourable to work in
the innovation process essential to achieving Knowledge Transfer,
particularly in physics based sciences. The dependence of universities
on the Research Assessment Exercise for much of their funding
deters academics from engaging in this work which is vital to
industry. This is a serious point for the RCs who need to look
for some less biased criteria.
Co-ordination between the RCs and the role of
RCUK
28. There is an obvious need for coordination
amongst the various funding bodies but the role of the RCUK umbrella
body is not particularly visible to us.
February 2006
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